Hong Kong will take legislative and administrative steps against speculative activity in the housing market, Hong Kong Chief Executive Donald Tsang (曾蔭權) said.
Asian economies are attracting “huge amounts” of liquidity, increasing inflationary pressure on their asset and consumer prices, Tsang said yesterday at the Foreign Correspondents’ Club of Japan in Tokyo.
Tsang’s comments come a week after Hong Kong Monetary Authority Chief Executive Norman Chan (陳德霖) said the territory faces a heightened risk of an “asset bubble.”
Higher down payment requirements, increased land supply and the raising of stamp duties on some luxury properties have failed to dampen home prices, which have more than doubled from a trough in 2003 on a recovering economy, two-decade low interest rates and an influx of Chinese buyers.
Tsang, who is in Japan attending an APEC forum in Yokohama, didn’t give details of any measures to curb speculation in Hong Kong’s housing market or the timing.
“The measures must remain secret until they are released, otherwise they become ineffective,” Tsang said. “I’m not discouraging the healthy movement of the property market. As the market grows here, definitely property prices will grow gradually, along with the economy, but if it’s moving out of kilter with the economy then something must be done, particularly if that growth is generated by speculative activities.”
The city’s residential property prices will likely gain 30 percent from now until the end of next year because a weaker US dollar will boost asset inflation, Cusson Leung (梁啟棠) and Joyce Kwock, Hong Kong-based analysts at Credit Suisse Group AG, wrote in a note to clients this week.
The US Federal Reserve’s expansion of stimulus will add to the risk of a housing bubble in Hong Kong and may force extra measures to cool prices, Chan said on Nov. 4.
Prior to 2003, home values went through a slump that began shortly after the Asian financial crisis hit in 1997, the height of the previous bubble.
In other news, Thailand said it would impose new measures to restrict lending on residential properties with a value of less than 10 million baht (US$335,000), Bank of Thailand Deputy Governor Krirk Vanikkul said yesterday in Bangkok.
The new measure will take effect on Jan. 1, he said.
“This is a preemptive action to encourage banks to be more cautious in mortgage lending,” Krirk said. “We decided to introduce the measure now before the situation gets worse beyond our ability to resolve.”
Loans for condominium purchases where the down payment is less than 10 percent of the property’s total value will attract a higher risk weighting based on the central bank’s formula, according to the Bank of Thailand’s statement.
“The measure doesn’t signal the central bank’s intent to prohibit these mortgage loans,” Krirk said. “It requires the commercial banks to set aside reserves for riskier loans.”
The central bank will also impose similar curbs on mortgage loans for the purchase of residential houses from January 2012, it said.
“Higher competition has led to a reduction in down payments for the purchase of residential property,” the central bank said. “This may increase the mortgage loan risk and lead to an increase in non-performing loans.”
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